Changing market structure - and the emergence of Financial Engineering
With the fast changing global scenario and increasing competition, large financial banks and brokerage houses are faced with the need to develop customized solutions and complex models to tackle niche and difficult client problems. These led to the creation of a new discipline – Financial Engineering; and thereby demand for a new breed of professionals. Being a nascent and highly paid field, more and more people are trying to acquire requisite knowledge and skills and move to this profession.
Growth of financial engineering courses across all segments
In the wake of the above, there has been a surge of financial engineering courses in India being offered by various colleges and institutions at different levels. These finance courses target students/professionals at different points: intermediate, graduation, and even after post graduation and provide degree/ certificate in financial engineering. In addition, some of them are also offered as skill development programs for working professionals.
Traditional structure of financial engineering courses
Traditionally, most of these programs have been long duration finance degrees, where one can pick up basics on all the topics within this field e.g. quantitative techniques, valuation and pricing of equity and derivatives, risk management, econometrics, financial modeling, understanding of credit risk, portfolio analysis, etc. Such courses are often provided by large universities.
Recent shift in financial engineering course structures
However, in recent times, there has been a growing demand by market participants for finance professionals with specializations in niche areas. One such field is Quantitative Trading and Algorithmic Trading. Algorithmic Trading, which was approved and introduced in India in 2008 after SEBI’s approval, is fully automated trading done by the computer system. Human intervention is NOT required for algorithmic trading. The algorithms are based on mathematical models which take the trading decisions and generate the orders. The technology then helps to execute these orders. It is an upcoming and extremely exciting field, with professionals needing not only trading and finance knowledge but also knowledge about writing and coding quantitative strategies, implementing them on advanced trading platforms and basics of quant finance. Careers in this domain are primarily of three kinds: as a trader (who uses the trading platform to trade in live markets and comes up with new strategies), as a quant specialist (who develops mathematical models on which strategies are developed) or as a developer (who writes the programs around the new strategies).
Institutes offering Financial Engineering courses in Algorithmic Trading
Being a nascent domain, there are very few institutions and universities in India where one can attend and learn algorithmic trading. Of these, Quantinsti is Asia’s pioneer institute in providing a dedicated algorithmic trading training program. Quantinsti’s flagship programme EPAT (Executive Programme in Algorithmic Trading) is designed so that one can learn the entire spectrum of skills needed for Algorithmic Trading. It equips students and professionals to be able to write quantitative strategies and implement them on advanced trading platforms.
The way ahead
Thus, one can conclude that although traditionally the impetus was to learn the basics of the entire gamut of topics within Financial Engineering, the future definitely lies in exploring the niche segments in depth.
If you are on the business development, strategy or technical side of the business, this article will tell you how to make the switch to the profit earning side. Read on to know how Maxime Fages, who comes from a strong M&A and corporate strategy background, enrolled with QuantInsti. After the certification, Maxime started his own quant research firm.